Duty-free input transfers between Export Oriented Units under CT-3 were held to justify waiver of pre-deposit at the stay stage.

Duty-free inputs imported by one 100% Export Oriented Unit under Notification No. 52/2003-Cus. were transferred to another Export Oriented Unit of the same appellant under CT-3 certificate. On a prima facie reading of the notification, such transfer for further manufacture was not shown to be impermissible, so denial of exemption was not justified at the stay stage. The appellant accordingly established a prima facie case against pre-deposit, and recovery was stayed pending disposal of the appeal.

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Issues: Whether the appellant had made out a prima facie case for waiver of pre-deposit in view of transfer of duty-free imported inputs from one Export Oriented Unit to another under CT-3 certificate, and whether recovery should be stayed pending disposal of the appeal.

Analysis: The imported goods were taken duty free under Notification No. 52/2003-Cus. The only dispute was that the duty-free inputs imported by one Export Oriented Unit were transferred to another Export Oriented Unit of the same appellant under CT-3 certificate. On a prima facie reading of the notification, such transfer to another 100% Export Oriented Unit for further manufacture was not shown to be impermissible. The denial of the notification benefit was therefore not supported at the stay stage, and the appellant established a prima facie case against pre-deposit.

Conclusion: The application for waiver of pre-deposit was allowed and recovery was stayed till disposal of the appeal.

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